America Had to Borrow $300 Billion This Week in Startling Reminder of the Truth
2018 March 28
Since the US became an independent nation, national debt has become a staple of national finances. As a young nation, it relied on loans from France, the Netherlands and domestic sources to finance the war. By the end of the war, national debt was reported to be $43 million.
The US has maintained a national debt every year of its existence apart from a few years of Andrew Jackson’s administration. Calling the debt a national curse, he had completely paid off the national debt after 6 years in office.
As of 2018, the United States maintains a national debt of $21 trillion and a national GDP in excess of $18 trillion dollars. China currently maintains the 2nd largest economy with $11 trillion in GDP but is thought to have in excess of $18 trillion in debt. Exact figures are difficult to find given China’s reclusive reporting of data.
The US debt per person stands at $64,597. This is how much every man, woman and child in America would have to pay in order to cancel out our national debt.
Deficits have slowly decline in recent years from their peaks during the fiscal crisis 2008. However, there are no models projecting a surplus as far as 10 years out. Barring a drastic change in either income or expenditures, the debt is predicted to grow for the foreseeable future.
1783 – As the Revolutionary War ended, the US Department of Finance reported US debt to the American public to total $43 million.
1812 – The war of 1812 began with the US debt reported to be $45.2 million.
1815 – The war had more than doubled the US debt by its end reaching $119.2 million.
1829 – Andrew Jackson is elected to office and campaigned against the debt which he called a “national curse.”
1836 – After 6 full years in office, Andrew Jackson had paid off the national debt by selling federally owned western lands and blocking spending on infrastructure.
1861 – At the beginning of the Civil War, the US debt had climbed back to $65 million.
1865 – Due to the cost of the war which was estimated to be $5.2 billion, the US debt had risen to $2.6 billion by its end.
1929 – The stock market crashed ushering in the great depression and a market loss of $8 billion. The recovery programs ushered in by Roosevelt grew the national debt to $33 billion.
1941 - At the US entry into World War 2 the national debt stood at $58 billion.
1945 – By the end of the war the US national debt had skyrocketed to $285 billion due to the war effort.
1963 – At the point of Kennedy’s assassination the national debt had crossed over $300 billion for the first time.
1981 – Ronald Reagan takes office with a nation debt of $998 billion in his first year.
1989 – George Bush Sr. takes office inheriting a national debt of $2.8 trillion.
2001 – The US debt continued to rise reaching $5.8 trillion by the time George W. Bush assumed the Presidency.
2009 – Barrack Obama becomes President with a national debt in excess of $10 trillion.
2017– At the end of Obama’s Presidency the national debt had ballooned to $20 trillion dollars.
2018 – The national debt stands at $21 trillion dollars with President Trump having to request a record $300 billion worth of bill and notes due to a decline in Federal revenue
There is a school of thought in economics that would tell you that the US national debt is actually a sign of a healthy economy. The perceptions is that countries continuing to buy our debt at low interest rates shows that despite our massive debt that an investment in the United States of America is still the safest bet in the land. Then again, for those who have been in the situation it’s a startling reality to have and own as much debt as one makes in an entire year. The United States debt has danced with its GDP for some time now, but it appears the national debt is on course to leave GDP behind in the dust. The United States economy is indeed the mightiest on the earth, but the earth’s history is full of the fallen mighty.
Global economics is full of nuances that seem contradictory and confusing to the average Joe. Everyone understands that a strong national currency is important. Yet, China intentionally undervalues its own currency for a stronger position in trade. The United States is currently in the first salvos of a trade war with China and yet, they continue to buy our national debt as if it is the best thing since sliced bread. Why would the United States cut revenue via tax cuts when our nation debt continues to rise seems at odds with good personal finance. More than cutting revenue, the United States continues to increase expenses in areas of defense. Either the world has gone mad or we truly have no idea what is going on. The average Joe does not have a degree in international economics, but most can agree to this one simple fact. Spending more than you take in is bad and America needs to stop it.
Sadly, the national debt is pressing ahead like a locomotive and were we to press the breaks today deficits likely would not cease for another decade. Political disregard for this truth leads the author to believer that this nation either has madmen as its conductor or racking up a debt we never truly intend to pay. Then again, maybe we will just mine asteroids for gold and manna will fall from the sky. However, a solution seems far from reach. It is important for a society to pay attention to its debts for fear that their children wake up to a $100 trillion dollar debt and no hope for the future. It may not be that we as a nation can pay off our debt in our lifetime. In fact, apart from another Andrew Jackson coming along who paid of the national debt in six years it is likely that our nation will follow the trend it has followed since its inception. Namely, debt, debt and more debt.
However, this current generation can hit the brakes. This week’s request to borrow $300 billion dollars to pay the bills should be a stark reminder of the reality we face as a nation. If you subscribe to the idea that debt is a sign of a healthy economy then that is up to you. If so, this is like Christmas come early. If, however, you just can’t escape the feeling that a ballooning debt is bad then we must all cry out into the wilderness for a little restraint. Since 1980 we have entered an era where debt not only increases but it does so exponentially. When trains running downhill continue to pick up more mass they only crash with a greater force. Energy equals mass times velocity and America would do well to consider what it is we want unleashed when that equation comes to fruition. Economics is complicated and it can cause the average Joe to check out. The author would encourage the average to take stock in what they know and pay attention to where the conductors of this nation are taking us.
Helping educate our members understand the bigger picture.
Subtopic A The United States is a nation with a history of debt that apart from moderate declines in occasional years has always headed up.
By the end of the Revolutionary War, the US had accumulated $43 million in debt. Despite a small period in the 1830’s where the debt had been paid off, the US has maintained a debt that has now risen to $21 trillion dollars.
The accumulation of national debt seems to occur regardless of which party is in office. Throughout this nation’s history there have been some parties that argued for fiscal restraint, but this failed to restrict the debt due to global and world events.
War seems to be the largest cause of a massive increase in national debt. After the war has ended, the deficits seems to remain somewhat in place at their current levels resulting in just a higher tier of continually growing debt.
Subtopic B Foreign Nations continue to have an interest in accumulating US national debt regardless of any adversarial status. However, most of the US debt is owned domestically.
China owns the most US debt with holdings totaling nearly $1.2 trillion dollars. Japan ranks second with just over $1 trillion.
Despite the adversarial relationship, Russia continues to increase its share in US national debt with holdings now reaching over $100 billion.
US Government agencies own $5.6 trillion in US debt by purchasing treasuries from agencies with a surplus of cash such as the social security trust fund.
Nearly $12 trillion dollars of debt is held domestically by the US public and other agencies. Most of the US national debt is held domestically.
Subtopic C Government projections forecast a national deficit for the foreseeable future.
From 2016 to 2026, the Congressional Budget Office projects national deficits in excess of $3 trillion dollars for the next 10 years with deficits steadily growing.
The Congressional Budget Office puts the US National debt at nearly $50 trillion in 2026 unless drastic measures in income through unpredicted economic growth or massive cuts in spending are announced.
While GDP in America continues to grow, the pace of the national debt is leaving it behind.
Story inspired by: Due to reduced federal revenue as a result of the tax cuts and skyrocketing expenditures, the Trump administration was forced to request $300 billion in notes and bills to finance the US government this week.
Point: The US national debt has crossed $21 trillion dollars and is project to grow over the next 10 years. Whereas some see this as a sign of a strong economy, the ballooning debt is growing at a pace faster than national GDP can keep up.
CounterPoint: The large US debt is a good sign of a strong economy where foreign nations believe the US treasury is still the safest place for their money exists. As long as interest rates remain low, global confidence in US debt shows that it is not too high.